2024-07-30 17:07:59
INSEE is counting on 0.1% this quarter, the growth between April and July finally reached 0.3%. Despite everything, the warning signs are piling up.
Without being in Olympic form, the French economy is currently on a positive trajectory. French GDP increased by 0.3% in the second quarter, according to the first estimate from INSEE published this Tuesday. Growth between April and June was higher than the Institute’s initial forecast (an increase of 0.1% compared to the first quarter). France is now among the Euro area average (0.3% growth in the second quarter as well), well ahead of Germany (-0.1%) but well behind Spain (0.8%).
The performance of the first quarter has been revised upwards, to 0.3%, the growth rate in France reached 1% of GDP at the end of the first half. This news did not fail to please the Minister of Finance, Bruno Le Maire, who had previously announced that « France will win with growth above government forecasts », at 1% of GDP by 2024, exactly. « Our economic policy produces strong results, it must be maintained over time. Changing course today would be a political mistake »that the resigning minister was barely veiled refers to the uncertain political right – these are the dissolution of the Assembly, France still does not know which political forces will be in government in September.
A catastrophic disruption and despite seriously eroding confidence in the sector, growth should continue to improve in the third quarter. At the beginning of July, INSEE predicted a recovery in activity thanks, among other things, to the positive impact of the Olympic Games. This « indeed YES » estimated at 0.3 points on growth, which will reach 0.5% in the next quarter. The Chamber of Commerce then predicted a contraction of 0.1% of GDP in the fourth quarter.
“More ambivalent” signals
For his part, Franck Riester, Deputy Minister for Foreign Trade, is happy to see in the figures of « Foreign trade has contributed to our GDP growth, thanks to the strength of exports ». This is indeed rare to notice. In the second quarter as in the first, foreign trade was the main driver of the French economy. It contributed 0.2 points to growth in the second quarter, according to the INSEE report. Exports were boosted significantly by the delivery of a new ship (a gigantic cruise ship Utopia of the seas in 1.5 billion euros, sent a few weeks ago by Saint-Nazaire ships to an American company) and, to a lesser extent, by deliveries in the aeronautics sector.
Read againDid a cruise really save French growth in the second quarter?
« The good performance of exports is a net positive for the French economy, but other drivers of this growth are more ambivalent. », comments Mathieu Plane, economist and deputy director of the French Observatory of Economic Conditions (OFCE). In the first half of the year, for example, activity is carried out by public spending and investment which remains strong despite the political discourse calling for savings on the state budget – two plans of 10 billion savings each have been announced by Bruno Le Maire earlier in the year. Far from drying up, public spending maintained a steady pace both in terms of investment and consumption, increasing by 0.6% and 0.3% respectively in the second quarter, INSEE details.
In total, this fund has made it possible to make 0.3 points of GDP growth since the beginning of the year. « This is obviously good news for development but it is also worrying news from the point of view of public finances. We don’t see how to adjust the increasing spending and budget adjustment policy », noted Mathieu Plane, while Bercy has decided to reduce public spending by several billions in order to achieve the public deficit target for 2024, 5.1% of GDP. This acceleration is due « transfer effects of credit use and this is also linked, for local authorities, to the power of local authority financing, to electoral cycles » and, therefore, it will not be traditional, justifies Bruno Le Maire.
After being in the red over the previous two quarters, business activity returned to positive territory, with a slight increase of 0.1%. They are fast in the works, offset the slow progress in the production products. Here again, Mathieu Plane sees a signal: ” Not even a jolt »he comments.
“I don’t see how growth can start again”
More than ambivalent, the index which affects home energy and investment is, for its part, a true concern. « We are very depressed because domestic demand has been very weak for three consecutive quarters. », deplres Maxime Darmet, economist at Allianz Trade. Over the entire quarter, this pillar of French growth (around 50%) remained stable: food purchases fell, while gas and electricity, especially due to bad weather in spring, increased as did services.
« It’s a bit of a cold book. Families continue to tighten their belts using goods, particularly – which is a bit worrying – food products »deciphers Maxime Darmet to AFP. « We expect a strong recovery in 2024 because purchasing power is increasing this year and the level of savings is significant. However, we found that the buildings are on alert »added Mathieu Plane. « Maybe they are waiting to see the political outcome of the post-dissolution process but, if domestic energy does not take over in the medium term, I don’t see how growth can resume. »he worries.
Especially since the trend seems to be broken, in June, household consumption fell by 0.5%. Another witness to this gloom, housing investments are still struggling in the second quarter (-0.5%, also), mainly due to the decrease in new housing, while interest rates remain high despite the reduction started in June by the European Central Bank (ECB) ). Worse, this is not expected to improve in the short term as the number of housing permits continued to decline last month in France, reaching a historic low since at least 2015, according to data published on Tuesday through the ministry of ecological change.
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